Section 378I Companies Act 2013 - Amendment of Articles
Section 378I of the Companies Act, 2013 lays down the statutory procedure for amendment of the articles of association of a Producer Company. It is part of Chapter XXIA dealing specifically with Producer Companies.
The provision specifies who may propose an amendment, the approval required from Members and the documents that must subsequently be filed with the Registrar of Companies.
Section 378I - Amendment of Articles
Section 378I(1): Any amendment of the articles shall be proposed by not less than two-thirds of the elected directors or by not less than one-third of the Members of the Producer Company, and adopted by the Members by a special resolution.
Section 378I(2): A copy of the amended articles together with the copy of the special resolution, both duly certified by two directors, shall be filed with the Registrar within fifteen days from the date of its adoption.
Meaning and Scope of Section 378I
The articles of association contain the internal governance rules of a company. In the case of a Producer Company, Section 378G contains detailed requirements concerning the contents of its articles. Section 378I provides the procedure by which those articles may subsequently be amended.
An amendment cannot be made merely by an informal decision of the Board or by management. Section 378I prescribes both a proposal threshold and Member approval through a special resolution.
Who Can Propose an Amendment?
Under Section 378I(1), a proposal to amend the articles must originate from either of the following:
- Not less than two-thirds of the elected directors of the Producer Company; or
- Not less than one-third of the Members of the Producer Company.
Satisfying either of these alternatives permits the amendment to be proposed. The proposal must then be placed before the Members for adoption by special resolution.
Special Resolution Requirement
Section 378I expressly requires the Members to adopt the proposed amendment by a special resolution. Section 114 of the Companies Act, 2013 governs ordinary and special resolutions.
In broad terms, for a resolution to qualify as a special resolution, the intention to propose it as a special resolution must be specified in the notice, the notice required under the Act must be duly given, and the votes cast in favour must be not less than three times the votes cast against the resolution by Members entitled to vote.
Filing With the Registrar Within 15 Days
After the Members adopt the amendment, Section 378I(2) requires the relevant documents to be filed with the Registrar within 15 days from the date of adoption.
The filing contemplated by Section 378I(2) consists of:
- a copy of the amended articles;
- a copy of the special resolution;
- certification of both documents by two directors; and
- filing with the Registrar within the statutory 15-day period.
Section 378I Compliance at a Glance
| Applicable provision | Section 378I of the Companies Act, 2013 |
|---|---|
| Applies to | Producer Companies |
| Subject | Amendment of articles |
| Proposal by directors | Not less than two-thirds of the elected directors |
| Alternative proposal by Members | Not less than one-third of the Members |
| Member approval | Special resolution |
| Certification | Amended articles and special resolution must be duly certified by two directors |
| Filing authority | Registrar |
| Statutory filing period | Within 15 days from the date of adoption |
Practical Procedure for Amendment
- Identify the provisions of the existing articles that require amendment.
- Prepare the proposed amended wording and ensure that it is consistent with the Companies Act, 2013 and the statutory framework applicable to Producer Companies.
- Obtain the proposal from the threshold required under Section 378I(1): not less than two-thirds of the elected directors or not less than one-third of the Members.
- Issue the required notice and clearly specify that the amendment is to be considered as a special resolution.
- Place the proposal before the Members and obtain approval by special resolution.
- Prepare the amended articles and copy of the special resolution.
- Have both documents duly certified by two directors.
- File the documents with the Registrar within 15 days from the date of adoption of the amendment.
Legislative Background
Section 378I forms part of Chapter XXIA of the Companies Act, 2013 relating to Producer Companies. Chapter XXIA was inserted by Section 52 of the Companies (Amendment) Act, 2020 (Act 29 of 2020), with the relevant provisions brought into force from 11 February 2021.
Frequently Asked Questions
What does Section 378I of the Companies Act deal with?
Section 378I deals with amendment of the articles of a Producer Company. It prescribes the threshold for proposing an amendment, requires adoption by special resolution and requires filing of certified documents with the Registrar.
Can the Board alone amend the articles of a Producer Company?
No. Even where the amendment is proposed by the required proportion of elected directors, Section 378I requires the amendment to be adopted by the Members through a special resolution.
How many directors are required to propose an amendment?
The proposal may be made by not less than two-thirds of the elected directors. Alternatively, it may be proposed by not less than one-third of the Members of the Producer Company.
What is the time limit for filing amended articles?
The amended articles and the special resolution, both duly certified by two directors, must be filed with the Registrar within 15 days from the date on which the amendment is adopted.
When did Section 378I become applicable?
The Producer Company provisions in Chapter XXIA, including Section 378I, were inserted through the Companies (Amendment) Act, 2020 and brought into force from 11 February 2021.
Legal reference: Companies Act, 2013, Section 378I, Chapter XXIA - Producer Companies. Readers should verify the latest statutory text, applicable rules, notifications and filing requirements before taking compliance action.